Preet Bharara: From CAFE. Welcome to CAFE Insider, I’m Preet Bharara.
Anne Milgram: I’m Anne Milgram.
Preet Bharara: How are you, Anne?
Anne Milgram: I’m good.
Preet Bharara: Dog days of August?
Anne Milgram: Yes, exactly. Summer. I love summer. How are you?
Preet Bharara: How am I? I’m the same. I’m the same. Every week, it’s the same.
Anne Milgram: Every day feels a little the same. I was working. I was on a work call on Saturday night and someone was apologizing. I was like, “You know? Every day is Wednesday or Thursday? I don’t know.”
Preet Bharara: Yeah. I don’t know what day today is. I think they’re just days.
Anne Milgram: Yes.
Preet Bharara: I don’t really know. We got a lot of stuff to talk about. As we are recording, on the morning of August 11, there was an oral argument going on in the DC Circuit Court of Appeals. The full court, I think we’ve mentioned this before, is now considering that whole issue in the saga of the case of Michael Flynn.
Anne Milgram: That’s right. Remember, the DC Circuit made a ruling basically overturning the district court judge, who hadn’t actually been ruled yet but essentially compelling the district court to grant Flynn’s motion to dismiss his case. Now, the DC Circuit had voted to hear it en banc. Meaning, all the judges on the DC Circuit would hear it together. That hearing is going on this morning.
As you and I have talked about, it’s a really important matter. It’s very, very unusual what the initial DC Circuit opinion did, which was basically grant something called a writ of mandamus, which is an extraordinary remedy that really …
Preet Bharara: Wait. What kind of remedy?
Anne Milgram: It’s an extraordinary remedy.
Preet Bharara: Extraordinary remedy.
Anne Milgram: Yes, exactly. I can’t say it differently.
Preet Bharara: You said that with no inflection.
Anne Milgram: That’s the term of art for mandamus. That’s the legal term.
Preet Bharara: What is it again?
Anne Milgram: An extraordinary remedy.
Preet Bharara: Yeah. That’s what I needed this morning, actually.
Anne Milgram: We’ll see what the court does, but I think that they will reverse the prior DC Circuit ruling. They’ll send it back to the judge to hold hearings on whether or not the case should be dismissed. We’ll see. We’ll know soon.
Preet Bharara: Yeah. We’ll see what happens and we’ll talk about it next week. Big news over the weekend because Congress was not able to act and people can decide who they want to blame for that. The President, it keeps getting reported, issued a series of executive orders. Can I give you a quiz?
Anne Milgram: Yes.
Preet Bharara: Are you ready? I didn’t give you advance notice of this quiz.
Anne Milgram: No, I know. I like a surprise quiz.
Preet Bharara: The President signed four documents, which of the following things is in fact an executive order? Is it one of them? Is it two of them? Three of them? Four of them? Because the way it constantly gets reported is there are all these executive orders that some people are saying are unconstitutional. One of the things the President did was delay the payroll tax collection for those making under $104,000 or so. Extending unemployment aid depending on how you count by $300 or $400.
The third thing was something having to do with evictions and we’ll talk about whether or not there’s a moratorium on evictions or not. Then fourth, student loan payments being deferred for the rest of 2020. Which of those, Anne Milgram, for 500, is an executive order?
Anne Milgram: Preet, there’s only one executive order and there are three memorandums. The executive order relates to housing evictions, it does not provide a moratorium on housing evictions. What it does do is direct the secretary of HHS and others to look at the idea of doing a housing … eviction moratorium, which is what …
Preet Bharara: Wait. Pause, pause and claim your victory. I even …
Anne Milgram: Okay. Yeah, 500, 500 to me. Yes.
Preet Bharara: Yes. There is only one executive order. It’s not executive orders. That’s all. That’s all I had to say.
Anne Milgram: That’s right. Here’s the part that I find almost most fascinating is that the one thing that it looks … like the President can do under his authority is declare a moratorium on housing evictions because the federal government obviously operates federal mortgage lenders, Freddie Mae and Fannie Mac. That is a lot of the mortgages in the United States of America, they …
Preet Bharara: Not all.
Anne Milgram: Not all but a lot, a significant number. The President could actually act to essentially defer or say, we’re not going to evict anyone within a certain period of time. He didn’t do that, Preet. He just said, I want you to look at it. I want folks to look at it. This raises a lot of issues but that’s the one EO which does essentially nothing.
I was going to ask you and I just want to be a little bit critical of the media for a second, because the initial sort of very strong take coming out was that the President issued four executive orders and they were unconstitutional. I think that they might not actually accomplish anything or there are enormous problems that might make them not lawful …
Preet Bharara: Ineffective.
Anne Milgram: Ineffective, yes. Or you could challenge them and litigate and I think win in many instances, but it doesn’t strike me as unconstitutional what the President did. In fact, it’s almost a little bit more sort of sneaky. I don’t know if that’s the right word, but what the President did was take grants of authority that Congress has made to him to have some ability to do things. We can talk about some specific examples. Then, he’s not followed those specific grants, he’s changed them to try to do what he wants to do.
Preet Bharara: Yeah. Part of it is the fault of the President, because the President will speak very expansively about what he’s doing, and he does this in every context all the time. Then, you look at the fine print of the thing that he’s done and it’s in fraction of what he suggested publicly. With respect to the one executive order, the one EO that he mentioned with respect to evictions, which barely does anything, it basically calls for a meeting.
Anne Milgram: I like a meeting.
Preet Bharara: Yeah, I mean, meetings are good. It’s like, yeah, I think HHS, they should do a podcast about evictions.
Anne Milgram: I’m only laughing because it’s like … an EO is far stronger than a memorandum. People should understand that. It’s an executive order of the President of the United States. As a rule, presidents do them when they have existing executive authority and they can’t get Congress to do something. They try to take action through EOs. Sometimes, they are controversial. Remember, Obama issued EOs related to immigration that some Republicans argued were unlawful. It’s not like a president has never used them.
Preet Bharara: Yeah. You know who one of those people was?
Anne Milgram: Who?
Preet Bharara: One of those people was Donald J. Trump.
Anne Milgram: Yes, true.
Preet Bharara: Who said, “You don’t govern by executive order, but we don’t have to dredge up …”
Anne Milgram: Until you do. Yes.
Preet Bharara: On evictions, he doesn’t do very much. Not really unconstitutional. Let’s pick another one. Unemployment aid.
Anne Milgram: Yes.
Preet Bharara: That’s kind of complicated, because as I think people know, there are tens and millions of people who are unemployed because of the pandemic, or nearly unemployed because of the pandemic. They had been receiving pursuant to a congressional bill that was passed into law, $600 a week from the federal government on top of whatever state aid they were getting.
Anne Milgram: Which was about $300 hours a week for states, so about $900 a week in total.
Preet Bharara: Yeah. That came to an end, I believe at the end of July. Then, the question was, could they extend it? The Democrats were saying it was extended at the same level. It gets complicated and Larry Kudlow himself was on television multiple times over the weekend, couldn’t really explain it.
Larry Kudlow: They’re in much better shape today than they were three or four months ago.
Speaker 4: When will people see their first checks?
Larry Kudlow: I don’t want to be specific because you might hold to me to it as you should.
Preet Bharara: I learned nothing from his presentations about any of the provisions, but in particular, this provision. Trump said that he was advocating for an extension of that benefit of $400 per week. If you read the fine print, it’s really $300 potentially, and the states who were scrapped would have to kick in 25% of that, because of the authority that’s being invoked in the memorandum. Do you follow any of this?
Anne Milgram: Here’s what I follow. I think it is worth a couple minutes of conversation about it because I feel like this is a really important thing. There are 30 million people who are on unemployment right now receiving benefits, those benefits ended at the end of July. The outcome will be catastrophic for our country. So many of those folks who’ve lost their jobs because of the pandemic and need the benefits to be able to pay bills. It relates directly to housing, otherwise they could be evicted.
There are all kinds of sort of real people’s ability to get food to support their families. What the President does is he basically takes money and again, going back to a prior congressional statute that had authorized the president to have money at the Department of Homeland Security under FEMA, which of course is the Federal Emergency Management Agency. Their job is to respond to natural disasters. We had a tropical storm last week, there have been many hurricanes. It’s basically the job of FEMA and the Disaster Relief Fund, which is a part of the money that the Homeland Security Department has.
That money is specifically set aside for in case of emergency. The reason it’s done like that and the reason it’s … I don’t want to call it a slush fund, but it’s a large bucket of money and it’s done like that, because it can take so long for the federal government to be able to authorize money to go to address a catastrophe or a disaster that they want DHS to have a bucket of money for FEMA just to be able to respond immediately.
What the President has now done is basically said he’s going to take $44 billion out of the disaster relief funds and use that to send an additional $400 a week to people. Actually, that would only be the $300 a week. Part of the statute that lets the President do this, take this essentially use federal funds to respond to a disaster. Again, assume for a minute that there’s a legitimate response that the government is making to like a hurricane or something like that. The states have to put in 25% matching funds.
That’s where you get to this point where the President is basically saying, “We’ll give you $300 a week in disaster relief funds, but the states have to put in $100 a week for you.” What becomes really critical here is that the President is using … there is a part of the Stafford Disaster Relief And Emergency Act. That’s what provides for this disaster relief fund. There is a part of that that allows the president to provide to, “provide financial assistance under this section to an individual or household to address personal property, transportation and other necessary expenses or serious needs, resulting from the major disaster.”
That provision is not alone. There’s also a provision as part of that law that says that people who are eligible for any other form of unemployment compensation cannot receive FEMA money. Basically caps the amount of money that people can get at what the state programs would allow. Basically, the President is, and I thought that there was a great piece that was written by Georgetown Law Professor David Super, where he basically said, “The President is both disrespecting Congress’s power of the purse because the Constitution says that Congress is the one that decides how money gets spent, and state legislatures that obviously should get to decide how they spend their money.” It’s both sort of an attack on the constitution and federalism at the same time.
Preet Bharara: Unconstitutional?
Anne Milgram: I think …
Preet Bharara: I thought you said it’s not unconstitutional.
Anne Milgram: The reason people are talking about it, I don’t think it is unconstitutional for the following reason.
Preet Bharara: It’s attacking the Constitution?
Anne Milgram: Right. I think it is an attack on the fact that if we go back to the way the Constitution is written and the norms, the norm is that Congress has the power of the purse. Congress is the one all spending bills have to start in the US House of Representatives per the United States Constitution. What Congress has done, and let’s be clear on this, we, you and I, talked about this a couple of years ago, but Congress has given the president enormous authority in some areas. This is one where Congress has given the president money to spend for disaster relief.
It is not contemplated to be done or use the way the President is doing it now. Obviously, we’re in hurricane season, they’re talking about taking $44 billion out of money that’s supposed to be used for hurricanes. We’ve seen serious hurricanes and flooding in places like Texas, in the Panhandle is Hurricane Sandy years ago. Hurricane Katrina in Louisiana years ago. That money is essential money for Homeland Security purposes. We’ve given the president money to spend for that.
What he’s now doing, and by the way, if there was a hurricane and people lost their jobs, there is money that’s contemplated, again, there are a lot of restrictions on it. The President is not following the restrictions that the law sets out. There is a bucket of money that under those circumstances could be used. Here, the problem is, number one, he’s essentially robbing Peter to pay Paul. Number two, he’s not following the law, the Stafford Act that sort of sets out what the President can do and can’t do.
Number three and probably most importantly, is that the way that this is done and should be done is through congressional negotiations. The House of Representatives wanted to give people who are unemployed $600 a week, the Republicans, the President said, I want to give them $200 a week. Mitch McConnell, the Senate Majority Leader, Republican from Kentucky said, “I don’t want to get involved in this negotiation.” He basically stepped out. The President used his power to do this and to do a number of other things.
I mean, I’m curious to know what you think Preet but a lot of things conveniently expire in December. A lot of the deferrals where people wouldn’t have to pay student loans, all those things or payroll taxes, those things expire or those deferrals expire at the end of December.
Preet Bharara: I don’t know. I don’t think it’s unconstitutional. With respect to that question, people are all over the map. Some people, I won’t identify them, sort of the knee jerk way in elective office have said it’s unconstitutional. Others probably have been advised better and think it’s a closer question and they’re not sure. They have said, I think my former boss, I think Senator Schumer said …
Chuck Schumer: I’ll leave that up to the attorneys.
Preet Bharara: Which is probably a smart dodge. At the end of the day, with respect to a provision like that, I don’t understand exactly how a challenge in court would even work. Unless someone runs in there and tries to prevent money from being given to folks who need it and gets some kind of injunction, money starts going out. Then, at the end of the day, weeks or months from now, there’s an adjudication against the President’s power in that regard. What are you going to do? You’re going to take the money back from all the millions of Americans who got a few hundred dollars a week? It just doesn’t seem workable to me.
Anne Milgram: You know where I think the litigation comes? Here’s where I think the litigation comes. It’s also politically very clever of the President, right? Because he’s essentially forcing the hands of the democrats who want people to get more money. He’s forcing them to basically go into court and say … to basically litigate against people getting $400 a month. They obviously wouldn’t be litigating against it, really, they’re litigating for them to have the power to negotiate. The optics are obviously pretty bad.
Here’s where I think you potentially get into litigation is that states are … almost every state you see is talking about laying people off, cutting essential social programs, cutting essential services for people in the state. That is because the pandemic has caused an economic disaster in the United States and states have deployed a lot of resources. They have, obviously, we just talked about made a lot of commitments to paying unemployment.
I’m not saying that states won’t pay that $100 a week but I think that there’s a fair amount that states could basically say around, you can’t compel us to basically pay in for this right now. We want to do it separately. That’s where I think … Then it raises this really weird question to me of, are you going to have certain states saying, yeah, we’ll pay the $100 a week to get the $300 from the federal government. Then, other states say, no, we’re not going to pay the hundred dollars a week.
Preet Bharara: I mean, I think it depends on the state’s wherewithal and what their status is and what their budget situation is. I think it depends on those things. Then, there are two other memoranda. One, related to the payroll tax. As people know, the payroll tax is paid both by the employee and by the employer. There’s been relief on that for a period of time. The President proposes delaying the payroll tax collection for people making less than $4,000 every two weeks, so that’s about $104,000 a year if I did the math correctly.
What should be clear to everyone is it’s not a cancellation of that tax. It’s not full forever relief from that tax. It’s just a delay. It’ll come due later. What’s interesting politically about that is the President seems not to like the payroll tax. One of his press people said, the President is seriously considering, I guess, when he gets reelected, eliminating the payroll tax altogether. That would be interesting because as people may know, it is the payroll tax that funds Social Security …
Anne Milgram: And Medicare.
Preet Bharara: Yeah. It sounds well and good and nice to say, hey, let’s cancel this tax. It doesn’t sound so well and good and nice to say, basically, we’re going to defund Social Security.
Anne Milgram: Yeah. My feeling on the payroll tax is that it’s like, do you remember Popeye and Wimpy?
Preet Bharara: Popeye the sailor man?
Anne Milgram: Popeye the sailor man, let’s bring it back. I love spinach now. I did not love spinach as a kid. Do you remember wimpy? I will gladly pay you tomorrow for a hamburger today. This is like the Wimpy provision. The president is trying to basically keep money in people’s paychecks so they vote for him for reelection. I’m sorry to be crass, but this is what I see is basically like …
Preet Bharara: You’re so crass.
Anne Milgram: I know. I know. Keep your money today and pay me tomorrow, right? What I call the so-called Wimpy provision would basically put people on the hook in January for essentially four months, four and a half months, of taxes that they haven’t paid to the federal government. Again, it’s sort of like the short term gain, you get money in your pocket. In January, it all comes due, there’s absolutely no sense or guarantee in my mind that the pandemic has ended by January and that people will have the money to pay this back. Nor do I think that that’s how Americans work.
I mean, I think a lot of people live paycheck to paycheck particularly right now. What do you make of the thing, Preet, that a lot of people are saying, it doesn’t matter because businesses are the ones that withhold these taxes when they’re paying people and they’re not going to stop withholding these taxes?
Preet Bharara: Yeah. I think people have to make a business decision about whether they withhold or not. You can get yourself into a deep hole if you don’t and you spend all that money now with the understanding that you’re going to have to pay it later. I mean, sometimes giving people a short term benefit is a problem. I mean, I think the same thing might be true of student loans.
If you say to somebody, I know it’s difficult, again, it depends on the circumstances. Some people really, really, really do need the short term relief. For other people, as a psychological matter, you don’t have to pay something, you spend that money and then all of a sudden, your huge bill becomes due in a few months, because you haven’t gotten forgiveness, you’ve only gotten delay. That can be a bigger deal in the future than paying a little bit at a time as you go along.
Anne Milgram: Yeah. I mean, the difference with the student loans, I think, that this one is lawful. I think that the Education Department has this authority to defer or cancel student loan payments to the federal government. Again, some people have private loans that wouldn’t be impacted by this, but to the extent that students and, again, a lot of students will have at least part of their loans will be owned by the federal government. This idea would be that the debt isn’t canceled and it’s basically not canceling it, it’s just pushing back.
They would temporarily cancel interest payments and principal payments would come back on December 31st. Full payments would restart on January 1st. I think, the question my mind is how they do it, if they just extend the term of the loan and don’t extend, don’t compound the interest, then there is value in probably for students of any length of time, particularly students who aren’t working or who are in difficult circumstances to have this option, saying, essentially, let’s extend it by six months.
We’re going to extend the loan term by six months, we’re not going to increase the interest payments, we’re just going to basically have a hiatus for individuals who are going through a lot. In fact, you could do it for a year, whatever, until the sort of pandemic or at least we came back to some normalcy in our world. I do think it’s a little bit different depending on how they approach it. Again, we don’t know how they’re going to approach it. It just basically tells the education secretary to start doing this and set some timelines.
Preet Bharara: You know one other executive action we should mention because we talked about some of this in the last week or two with respect to TikTok, that website that the kids seem to love. The President did issue an executive order on August 6th, under the National Emergencies Act, and what we call IEPA, The International Emergency Economic Powers Act in connection with TikTok. The order says, “I, Donald Trump, President of the United States of America, find that additional steps must be taken to deal with the national emergency with respect to the information and communications technology and services supply chain declared in the previous executive order,” that’s where he takes his authority from.
He goes on to day, “At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok.” Now it gets very complicated. What kind of action will take place? As we’ve mentioned previously, there’s a process that’s already underway by a committee called CFIUS that examines from a national security perspective whether or not a certain combination or merger or purchase is right for the United States and it can demand divestiture.
By this executive order, the President is sort of saying, do what I say and he’s injecting himself in a way that could be judged to be interference. There’s also still this potential deal with Microsoft. Unclear what’s going to happen.
Anne Milgram: Yeah. I think the other point is that the executive order isn’t just for TikTok. It’s also for WeChat, which is also a Chinese company. The parent company is known as Tencent. Tencent has widespread investments in the United States that include WeChat, but they also own parts of … they own 5% of Tesla. They have full ownership of Riot Games that makes League of Legends video game. They have a minority stake in Activision Blizzard that makes the video game Call of Duty. They have 12% of Snap the developer of Snapchat. They own part of Spotify, some of Universal Music Group.
What that divestiture would look like is even more complicated than TikTok. Where TikTok’s parent company is in China, but TikTok and a lot of the pieces are in the United States. The idea of this applying to WeChat as well. This is complicated and we can continue to follow it. I suspect that there will be litigation of the companies, both Tencent and ByteDance. Considered litigating it, this process does look strange and outside the normal sort of channels that would usually happen. It will continue to be something, I think, that we’ll have to keep an eye on.
Preet Bharara: Let’s talk about the courts. There is a case that we have talked about before relating to Congress’s subpoenas of the former White House Counsel, Don McGahn. We’ll talk about it and it, I think, also is a little bit of a foreshadowing of what might happen to the Michael Flynn case we mentioned at the beginning of the show.
People may remember that the US Court of Appeals for the DC Circuit ruled against the House, two to one. Usually, Court of Appeals arguments are panels of three judges in that court. By two to one, they basically said, it’s really not for us to get involved in the dispute between the House of Representatives, Congress, on the one hand, and the President, the executive branch, on the other hand. What I think is fascinating, if you have a two to one majority, when you have a three-person panel, obviously, that position wins.
The position was that they should stay out of it and let Congress and the White House work it out between themselves. Then, what gets kicked to the whole court, there are 11 judges in the DC Circuit, two of them recuse themselves for having worked in the executive branch before. The ruling was what? Seven to two. Every judge in the circuit, who was in a position to vote on this question, disagreed with the two-member majority of the first three-person panel. It’s the luck of the draw that they lost, that the House lost in the first instance.
I think it’s a mathematical matter. If they had gotten any other combination of three judges, they would have prevailed in the first instance, right?
Anne Milgram: Are you asking me to do a statistical analysis of that? That sounds complicated. Yes, in general, yes, I agree with you. Some mathematician and statistician will write and then explain to us what the possibilities are.
Preet Bharara: I guess it suggests, you can have skewed decisions. I mean …
Anne Milgram: You know what got me, Preet? There’s like more than, I don’t know, there’s millions of ways in which you can make configurations with six Legos. I started thinking like, if you have six Legos and can make millions of configurations, what happens with seven judges?
Preet Bharara: If you have only two judges, you’re going to be with the White House’s position.
Anne Milgram: Right.
Preet Bharara: Then, my hypothetical, you have any combination that does not have one of those two judges …
Anne Milgram: Yes. I think you’re right. When you say it like that, you won me over. You know what else is interesting? Is that in the two-one original decision, right, Judge Griffith wrote the opinion, Judge Henderson concurred. Those are the two judges who are now in the minority on the en banc decision. The judge that dissented in the initial opinion, Judith Rogers, she wrote the opinion of the court in the seven-two decision.
She had dissented now she writes the majority opinion. What’s interesting also, and a lot of folks sort of, I think noted this when the Supreme Court ruled recently in the Mazars’s case. The case that the court did, the Supreme Court, addressed the question of the subpoenas to Mazars that had Donald Trump’s financial records. They had a conversation about standing and what can go forward and what can’t.
Here, what the court is basically saying is like this clearly falls within the courts having standing to hear this matter and so a lot of people sort of indicated that they thought it would happen after Mazars. I think it still is a really important decision.
Preet Bharara: The other thing, again, not to get ahead of ourselves, because we’ll be discussing this next week, because as we mentioned earlier, there’s an argument going on with respect to what happens to the Michael Flynn case. There, you had a decision also, where you had a three judge panel that ruled against the district court judge and in favor of Michael Flynn’s lawyers to issue the mandamus.
I think this doesn’t bode well for the Flynn position. It’s a different issue. There are different matters involved.
Anne Milgram: Yeah, I agree with you. I agree.
Preet Bharara: That is another example of a thing where lots of experts, you and I included, if we can dare call ourselves experts, thought that decision was wrong and out of step. There are members of the DC Circuit Court of Appeals, who on some of these matters seem out of step with the full court. I think that the Flynn lawyers should be worried about what’s happening there.
Anne Milgram: The question I have though is so basically what this says is that the judiciary can compel McGahn to come forward. Now, we’re in a position where McGahn can still claim privileges. He can still litigate executive privilege. He was the White House Counsel. It’s not like McGahn is going to come in and have to testify to everything. He can still litigate parts of it. We are now, I mean, remember this goes back to the 2016 election and the Mueller investigation McGahn was an important witness in that investigation.
We are now about to have the 2020 presidential election. I mean, it has taken so long for this to wind its way through the court. McGahn, is he going to testify before the election, Preet?
Preet Bharara: No, I think, a lot of these things will be of less interest to a lot of people as the months were on.
Anne Milgram: The one thing that is important though, is it does set a very clear precedent that if the judiciary committee subpoena is a witness, they have the ability to invoke specific privileges, but they can’t do essentially what the White House was doing here, which is to completely ignore a congressional subpoena for our witness.
Preet Bharara: Yeah. The court also emphasized something that was under emphasized in the earlier opinion and in some other opinions that we’ve discussed. That is, not only does Congress have a real role in enacting legislation, obviously, they are the ones who enact legislation. They need the ability to do that. They need to engage in fact finding to do it. There’s some legitimate legislative purpose that’s being vindicated.
Also, oversight. Of course, it cannot conduct effective oversight of the federal government without detailed information about the operations of its departments and agencies. It’s a recognition of this other role, not the primary role, but maybe a secondary role, I would think you could say, of the Congress in engaging in oversight of a separate and distinct branch of government that justifies the seeking of information. The details …
Anne Milgram: That’s important too because …
Preet Bharara: … negotiate it, but yeah, it’s very important.
Anne Milgram: Yeah.
Preet Bharara: That’s been completely cast aside in arguments made by the president’s lawyers before.
Anne Milgram: What I think is also important about the point you just made is that it is short of impeachment inquiries. I think that the court was careful to note that there were a number of ways in which Congress is entitled to get information to pass laws, to do executive oversight and during impeachment inquiries, and the McGahn subpoena was issued prior to the vote to start the impeachment inquiry in the house.
What’s important about it is that it doesn’t say that all matters have to … It’s only for impeachment that you can get this type of witness testimony. It basically points out all three functions of Congress, which again, to your point, I think is really important going forward for Congress to have real oversight over the executive branch. Otherwise, it stops being a co-equal branch of government.
Preet Bharara: Here’s a question from a listener that gets us into our next topic. This is from Mary, who writes, “Love your show. I understand it’s not a federal case, but I would love to hear your take on the legal action taken by the New York Attorney General, Letitia James, against the NRA. Thanks, Mary.”
The action taken by Letitia James before we get to what she did with respect to the NRA, my observation is the evening before the attorney general’s office in New York issued a press release saying there was going to be an announcement of national significance the next morning, like 11:00 a.m. What’s interesting to me and we can discuss what it says about the state of members of the public and their need and desire and wish for some savior to deliver them from Donald Trump.
Twitter, social media, news accounts, blogs were awash with a frenzy that here at long last was a state attorney general who’s going to do something like indict the President of the United States.
Anne Milgram: Which was bizarre to begin with, because the state of New York AG does not have that power. The state AG has very limited criminal power.
Preet Bharara: People cling to the hope. They cling to the hope of Bob Muller, to whom they lit candles. They’ve clung to the hope of the 25th Amendment. Even though we’re on the eve of the election, it’s less than 90 days away, lots of people still think, maybe there can be a lightning strike from heaven from some prosecutor’s office, by analogy, and get rid of the President or harm the President.
The only thing that’s going to get rid of the President is an election that is overwhelming in November.
Anne Milgram: Yes. Yes. I think you’re right that people were sort of … There was also a lot of weird speculation about it relating to the Manhattan DA’s investigation. It really didn’t make sense. That day, Tish James, the New York AG, announces that she’s brought a civil action under her authority, essentially, as overseeing charitable organizations in New York State. I oversaw these charitable organizations when I was AG in New Jersey. This is a pretty common AG role.
There’s a law in New York that looks at overseeing not for profits and states and basically the public charities laws. There are a number of things that groups that want to be registered as charities have to do and follow. I think we should break this into a few different buckets. One of the things that I was pretty stunned by and some of this had been reported before, but was the extent of the fraud and the level of corruption of the Executive Vice President Wayne LaPierre, the General Counsel John Frazer, the former Chief Financial Officer Woody Phillips and the former chief of staff Joshua Powell. This has been an 18-month investigation.
I don’t even know how they got to this amount but millions of dollars spent in town cars and travel expenses, travel consultants, basically gifts, all these Safari that Wayne LaPierre went on with his wife in Africa. All these sort of sweetheart contracts where they got no bid contracts to continue consulting relationships with the NRA. I mean, just the kind of stuff that you and I would look at in any type of financial fraud case. It would just be like alarm bells would be ringing because no legitimate justification, no board approvals, personal use, I mean, the kinds of things that make very, very strong criminal prosecutions.
This is not a criminal prosecution. No, I think, obviously, there’s a lot of evidence here of financial fraud against the members of the NRA essentially. Basically, I mean, the accusations really are that people were paying dues to the NRA and the leadership, the sort of executive leadership, was stealing that money for their own personal benefit.
Preet Bharara: Can I make an aside that’s not about the law?
Anne Milgram: Yeah.
Preet Bharara: Because obviously, the NRA is a controversial organization. People feel strongly about gun regulation and about how much influence the NRA has over politics. There’s a political aspect to all of this. Is it odd to you that given how concrete the allegations are and how much documentary evidence there appears to be, whether or not at the end of the day, the NRA is dissolved. Whether or not at the end of the day, there’s a criminal case, I’m hearing the deafening silence of all sorts of supporters of the NRA, including people who pay dues to the NRA, the silence of them not being upset that the leadership seems to have been bilking the organization for personal benefit and lining their own pockets, and living a lavish life.
Where’s that outrage? The complainant’s face has nothing to do with guns. It has nothing to do with the policy positions of the NRA. It’s pure and simple, fraud, pocket lining enterprise by the leadership, especially Wayne LaPierre at the NRA. There’s no political aspect to it, at least, in the text of the complaint. You would imagine that if the same kind of thing was happening at the head of any other nonprofit organization, liberal, independent, think tank, conservative, whatever. There were credible allegations of this kind of fleecing of the organization, that the rank in file would go bananas.
Not only the rank in file, but other public officials as well, whatever side of the political spectrum they’re on. Instead, in the face of these detailed allegations, you have people like the governor of Arkansas, Hutchinson, saying, hey, if you don’t like New York, come to Arkansas. A welcoming gesture.
Anne Milgram: Or was it Texas also?
Preet Bharara: I think multiple states. I think multiple states. What is the reason why people who are otherwise supportive of the mission of the NRA, and it can be or cannot be, seemed to be so dismissive of these? Why can’t they be mad at Wayne LaPierre and the leadership and want them replaced and want them to be held accountable and then separately support the mission of the NRA? I don’t really follow that.
Anne Milgram: Right. I think my reaction to the whole thing? My first reaction is where I started, which is just that it is a pretty stunning level of abuse and theft from the organization. There are just so many different examples detailed in the complaint of ways in which the sort of four C suite level executives of this organization, forget politics for a minute, this could be a business. This is a nonprofit organization, the way that they essentially rated the organization for their own personal benefit and profit.
It is really, really significant that they have taken out so much money. They’ve been just in constant legal battles related to this. They’ve spent, I think, it was something like $100 million on litigation. They’re essentially bankrupt now, as opposed to being an organization that once exerted huge amounts of political influence. They are a political organization, we should say that, they’re C4. Their right to be a political organization is very, very clear.
There are political organizations on the left, political organizations on the right, this happens to be a gun organization. I agree, just putting aside how we feel about that for a second, the charities is meant to be sort of evenly applied. The fact that people don’t understand the level of abuse is troubling to me. The one question I will ask you, Preet, and the one thing in my mind, I mean, I think that there’s two really fair questions that people are asking about the litigation.
One, and I want to come back to this, but whether or not the AG should have sought to dissolve it. I think that that is really important thing for us to discuss. The other piece that I was a little bit stuck on is that if I were sitting in my chair as AG and there were times that we had to … there were times that we basically said that charities, we were revoking their license in New Jersey that they weren’t going to be allowed to basically go out, that we were going to require reorganizations and such.
Charitable organizations can very much take advantage of people for all the reasons we know. This investigation went on for 18 months and then they drop it in the middle of August before the presidential election. Whether or not the investigation is political or not, the timing just doesn’t feel right to me. I personally think I would have waited. I wonder how you feel about this? I think I would have waited till November particularly given what is a very aggressive and it looks to me potentially legally supportable ask to dissolve the entire organization.
That is the ultimate sort of hammer under the charity’s laws to basically say, we’re dissolving you because we don’t think there’s any version … There’s no way for new leadership to come in and fix this.
Preet Bharara: Remember, the New York Attorney General’s Office already did such a thing with respect to the Trump Foundation.
Anne Milgram: Yeah. I think it’s a little different, though. I think it’s different.
Preet Bharara: Look, on the question of, and not everyone’s going to like this, on the question of whether or not it was legitimate and appropriate to go after the NRA in this way and on these grounds, I think, lawful, not unethical. There is a question about the propriety of it because while it is true, as I said earlier, that nothing on the face of the complaint and the text of the complaint is about the nature of the NRA’s work or its ideology or the gun rights second amendment work that it does.
No logical human being can think that did not enter into the mindset of the attorney general of the state of New York. You can say that’s okay or that’s not okay. There’s a piece in The Washington Post by Ruth Marcus, which really made me think about this. Ruth Marcus begins by saying she’s a noted liberal, I think fair to say. She begins her op-ed by saying, “I loathe the National Rifle Association. With its reflexive opposition to even the mildest gun regulation, it is complicit in the deaths of thousands.” I just sort of feel the same way.
Anne Milgram: Me too. I feel the same. Yeah.
Preet Bharara: Lots of people on one side of the political spectrum feel the same way about the NRA. It is, I think, a harmful organization, that has strayed very, very, very, very far from its original mission that relate to gun safety and some other things. Ruth Marcus also then says, “The NRA has a First Amendment right to its misguided understanding of the Second. Forcing its dissolution has disturbing implications, made even more disturbing by the fact that the attorney general seeking that step is a Democrat who vowed during her campaign to “take on the NRA” and labeled it a terrorist organization. In this country, we don’t go after entities because of what they advocate.”
Not everyone’s going to like that position because there are people who say, well, you go after an organization because there was fraud. There’s nothing wrong with that. I wonder if people would feel the same way if you had an aggressive attorney general of a state going after a liberal organization, when they really didn’t care that much about fraud at the organization. I mean, in some ways, some people who I’ve seen on social media who don’t like the NRA is like, “Good for them. Those suckers deserved that kind of looting of their own money.”
If a complaint against an organization whose politics you disagree with is a pretext for trying to dissolve something for that reason, because you disagree with them, is that right and proper or not?
Anne Milgram: Right. Look, I think, you’re raising exactly the right questions. I also read that piece by Ruth Marcus and thought it was powerful because, I mean, she’s asking a very important question, which is basically saying it’s not about whether you agree or disagree with them. I know a lot of people will feel differently but the charity’s laws apply regardless of politics and organizations like the NRA, C4, their equivalent organizations on the left and the right.
The thing I kept thinking about is somebody who’s overseen charities is that as a rule, there were instances when we took the most aggressive action, it was instances where charities had already been given an opportunity to reform or they’ve been identified as being problematic and flagged for … and basically told you’re going to lose your status unless you do this.
Preet Bharara: Right like recidivist. Like the people who are recidivists, right?
Anne Milgram: Yes, exactly. I’m not saying in any way that they had to give a warning because this is rampant. In terms of the remedy, to me, the question really is, you have people who are members of the NRA, who are giving dues and by all accounts, including in the complaint, are not … they haven’t basically agreed to have the executive steal money from them and use the money for their personal gain. They basically are seeking to have an organization basically do a certain mission.
It just isn’t clear to me that you can’t require, I mean, the sort of first step in the complaint is dissolve … the big ask is dissolve the organization. The sort of subsidiary ask is removed those four people from their positions and have forced them to pay restitution and pay the money back. I think the question in my mind, if I were sitting in the AG’s office would have been, essentially, what if you require those four people to leave, pay back the money and you do a monitorship of the organization.
Basically, you’re going to be able to like … they can put new leadership in, but you’re going to basically monitor it for the next five years to make sure that it functions in a way that’s consistent with all the charity’s laws, could you actually allow the organization to function? That to me is sort of where I think I would have started or thought about it. Again, I’m not saying it’s not lawful to seek disillusion. This is rampant fraud, but you are setting a precedent that the answer to basically assess by the senior executive committee.
Look, we’ve seen this in businesses. We’ve seen this in charities. It does happen that the answer is to completely dissolve it. There are some folks who have suggested that James might have put it in as a negotiation tactic. Certainly, I doubt that. I hope it’s not true, because that’s not the right … I just would not agree with that at all. She put it in basically thinking, well, I’m going to ask for disillusion and then I’m going to settle for the removal before.
Preet Bharara: Public law offices are supposed to seek what they think is right and just and not engage in that kind of maneuvering, right?
Anne Milgram: I should say, clearly, I don’t take those allegations, those sort of assertions, that face value, but a lot of sort of smart lawyers are writing pieces saying, well, this is probably to get a settlement. I don’t agree with it. If it were true, which again, I don’t think it is, I would be disappointed in that because, again, you should ask for the remedy that you think is fair.
Look, we’ll continue to watch this. I also sort of wonder in my mind, Preet, like did they give this information to law enforcement? It feels to me like these are cases that are ripe also for criminal prosecutions.
Preet Bharara: Yeah, I mean, people say that all the time. I had a civil division and a criminal division and some things you just can’t prove beyond a reasonable doubt and you can’t prove willfulness. I imagine, we didn’t talk about it, we haven’t seen an answer yet from Wayne LaPierre and the executives in the NRA. They’re not going to surrender. Presumably, they have some defenses based on the bylaws of the organization. Even though some of the spending was exorbitant, I imagine that they will argue maybe not credibly, but they will attempt to argue that these expenses were approved by the organization and deemed necessary by the membership, et cetera, et cetera, et cetera.
If you have some even face saving defense like that, it makes a criminal prosecution even harder. I just want to say one thing that’s the flip side of what I said before, when we were talking about the Ruth Marcus op-ed. It is true on the one hand that you just want to be a little careful about going after an organization whose politics you don’t like and whose actions you’ve criticized substantively because it looks a little bit odd. On the other hand, it is also important to say that if there’s rampant malfeasance going on in an organization, just because you disagree with them, and just because it’s a conservative organization, just because people might say, hey, this is a proxy for you’re trying to destroy an organization you disagree with.
Just because those things are true doesn’t mean you get immunity from accountability. It’s not a get out of jail free card, right? There are two sides to the coin. You can’t go through life as the NRA, thinking with impunity, we have a First Amendment right to do whatever and so we can pillage and loot and steal from our membership. Because people like Letitia James, and others shouldn’t be able to go after us because they don’t like the substance of what we do. They don’t like our interpretation of the Second Amendment. It doesn’t work that way either.
Anne Milgram: I agree.
Preet Bharara: I guess all I’m saying is, people need to be … you just need to be careful if you’re a lawyer in the public trust as to what you decide to do, how you decide to do it, so that people have faith that things are being done for the right reason.
Anne Milgram: This is my point on timing. This is my point on timing because I think that the public having faith is really important that she holds an enormous amount of power on behalf of the people of the State of New York, of which I am one. What you want to make sure is that that power is exercised in a fair fashion. My feeling is exactly right. I believe the NRA should be held like the organization has to be held accountable. This is rampant fraud and abuse.
The question in my mind is that it just feels much more political because of the timing. I would guess that they basically said … they said August is the deadline to get this case out because September, October looks even more political. It’s still, in my view, it’s too close to the election. It feels too political for a variety of reasons. I would have preferred to have seen this two months ago or at the end of November.
I think that would have sort of change the calculation a little bit of how people are reviewing the request. Again, I think it’s totally legitimate to see the dissolution of a charity and it happens across America frequently. The question is sort of is it the right thing to do here? What’s the right outcome? I want to make just one quick final note, which is, people have compared this to the Trump Foundation where Barbara Underwood Attorney General James’s predecessor, sought the dissolution of the Trump Foundation and the Trump Foundation agreed.
That was a very small amount of money that was, relatively speaking, that was a small foundation. Remember, they don’t have constituents, it’s not a membership organization. Whereas here, the challenge here is that the NRA is a membership organization. Like it or not, there are people who believe in the organization and pay dues and are seeking to have an organization that furthers their interest. And so there is in my mind a very large distinction in terms of how you think about dismantling a charity when you have members who have interest in what is the legitimate goal that the organization is not fulfilling lawfully, right? That, to me, makes it different.
Preet Bharara: Yes. I totally agree with that. My question is, and maybe they don’t have the ability to speak. I’d like to know what the membership thinks. You would think there would be outrage. You think you’d read articles with quotes from rank and file dues payers at the NRA saying I’m horrified and I want them to get the hell out.
Anne Milgram: I’m going to tell you what I think. I would love to be wrong about this. I think that they are probably both horrified by or they should be horrified by what Wayne LaPierre has done. I think that the move to dissolve the organization has become … the right has now galvanized around this and are just playing offense around the democratic political overreach by the New York Attorney General. That basically, they’re using that as fodder to say, they just hate you. Democrats hate you and your organization …
Preet Bharara: Or they don’t believe it.
Anne Milgram: Exactly. Yeah.
Preet Bharara: People have sort of blinders on about the NRA, like some people do with other organizations on both sides of the aisle that they either don’t believe it. They think it’s exaggerated and even if it is true, what Tish James is doing is more terrible than what Wayne LaPierre did as you say?
Anne Milgram: Right. That’s what I sort of think. Again, I’m not agreeing with that at all but I think it’s the spin. If you watch the media cycle around this, it was on the left very much. It’s great. You’re going to dissolve the NRA. On the right, it was, this is an incredible overreach to try to dissolve an organization, a membership organization. By the way, one other point that shouldn’t be lost on folks is that the litigation surrounding this, again, the NRA has been just a meshed in litigation for the past basically two years.
It will have an enormous cost when Wayne LaPierre will seek to have the organization pay his legal fees as well as the three others and so this is going to mire, the organization itself is going to, in my view, cease to function in many ways because this type of litigation will take a long time, cost an absolute fortune to litigate and will be at a large expense to the organization. I would expect that what we usually see from the NRA in terms of political ads, political donations during an election cycle, that will be dramatically changed because they’re basically now going to have to litigate. They’re going to litigate all this for a while.
Preet Bharara: You can fundraise off the fact that you have an existential threat. All right, so Anne, we got to go and follow what’s going on with the Michael Flynn hearing, so we can report back.
Anne Milgram: Exactly. Talk to you very soon, Preet. Take care. Please send us your questions.
Preet Bharara: Talk to you next week. That’s it for this week’s insider podcast. Your hosts are Preet Bharara and Anne Milgram. The executive producer is Tamara Sepper. The Senior Audio Producer is David Tatasciore. The CAFE team is Matthew Billy, David Kurlander, Sam Ozer-Staton, Calvin Lord, Noa Azulai, and Geoff Isenman. Our music is by Andrew Dost.
Thank you for being a part of the Cafe Insider community.